Macroeconomics - Canada in the Global
Environment 9th Edition Exam Review.
Gross Domestic Product (GDP) - ansthe market value of the final goods and services
produced within a country in a given time period.
Market Value - ansthe price at which items are traded in markets
Final Good (and Service) - ansan item that is bought by its final user during a specified
time period
Intermediate Good (and Service) - ansan item that is produced by one firm, bought by
another firm, and used as a component of a final good or service
Households and Firms - ansthey buy the services of labour, capital, and land in factor
markets.
Governments - ansbuy goods and services from firms
Rest of the World - ansthe value of exports (X) minus the value of imports (M) is called
net exports (NX)
Total Expenditure/Aggregate Expenditures - ansequals consumption expenditure + net
investment + government expenditure + net exports
Aggregate Income - ansequal to the amount paid for the services of the factors of
production -- wages, interest, rent, and profit
Depreciation - ansthe decrease in the value of the firm's capital that results from wear
and tear and obsolescence
Gross Investment - ansthe total amount spent both buying new capital and replacing
depreciated capital
Net Investment - ansthe amount by which the value of capital increases
Indirect Tax - anstax paid by consumers when they buy goods and services
, Direct Tax - anstax on income
Subsidy - ansa payment by the government to a producer
Real GDP - ansthe value of final goods and services produced in a given year when
valued at the prices of a reference base year / it is measured using a common set of
prices to remove the effects of inflation from GDP
Nominal GDP - ansthe value of final goods and services produced in a given year when
valued at the prices of the year. (just a more precise name for GDP)
Real GDP per person - ansis Real GDP divided by the population. Real GDP tells us
the value of goods and services that the average person can enjoy
Potential GDP - ansis the max level of Real GDP that can be produced while avoiding
shortages of labour, capital, land, and entrepreneurial ability that would bring rising
inflation
The Expenditure Approach - ansconsumption expenditure + investment + government
expenditure on goods and services + net exports / Y=C+I+G+X-M
The Income Approach - answages + interest + rent + profit (+ indirect taxes less
subsidies + depreciation)
Business Cycle - ansfluctuations in the pace of expansion of Real GDP. It is a periodic
but irregular up-and-down movement of total production and other measures of
economic activity.
Expansion - ansa period during which Real GDP increases.
Real GDP returns to potential GDP, and as the expansion progresses potential GDP
grows, and real GDP eventually exceeds potential GDP
Recession - ansa period during which Real GDP decreases -- its growth rate is negative
-- for at least two successive quarters
Peak (on Business Cycle) - ansWhen expansion ends and recession begins
Environment 9th Edition Exam Review.
Gross Domestic Product (GDP) - ansthe market value of the final goods and services
produced within a country in a given time period.
Market Value - ansthe price at which items are traded in markets
Final Good (and Service) - ansan item that is bought by its final user during a specified
time period
Intermediate Good (and Service) - ansan item that is produced by one firm, bought by
another firm, and used as a component of a final good or service
Households and Firms - ansthey buy the services of labour, capital, and land in factor
markets.
Governments - ansbuy goods and services from firms
Rest of the World - ansthe value of exports (X) minus the value of imports (M) is called
net exports (NX)
Total Expenditure/Aggregate Expenditures - ansequals consumption expenditure + net
investment + government expenditure + net exports
Aggregate Income - ansequal to the amount paid for the services of the factors of
production -- wages, interest, rent, and profit
Depreciation - ansthe decrease in the value of the firm's capital that results from wear
and tear and obsolescence
Gross Investment - ansthe total amount spent both buying new capital and replacing
depreciated capital
Net Investment - ansthe amount by which the value of capital increases
Indirect Tax - anstax paid by consumers when they buy goods and services
, Direct Tax - anstax on income
Subsidy - ansa payment by the government to a producer
Real GDP - ansthe value of final goods and services produced in a given year when
valued at the prices of a reference base year / it is measured using a common set of
prices to remove the effects of inflation from GDP
Nominal GDP - ansthe value of final goods and services produced in a given year when
valued at the prices of the year. (just a more precise name for GDP)
Real GDP per person - ansis Real GDP divided by the population. Real GDP tells us
the value of goods and services that the average person can enjoy
Potential GDP - ansis the max level of Real GDP that can be produced while avoiding
shortages of labour, capital, land, and entrepreneurial ability that would bring rising
inflation
The Expenditure Approach - ansconsumption expenditure + investment + government
expenditure on goods and services + net exports / Y=C+I+G+X-M
The Income Approach - answages + interest + rent + profit (+ indirect taxes less
subsidies + depreciation)
Business Cycle - ansfluctuations in the pace of expansion of Real GDP. It is a periodic
but irregular up-and-down movement of total production and other measures of
economic activity.
Expansion - ansa period during which Real GDP increases.
Real GDP returns to potential GDP, and as the expansion progresses potential GDP
grows, and real GDP eventually exceeds potential GDP
Recession - ansa period during which Real GDP decreases -- its growth rate is negative
-- for at least two successive quarters
Peak (on Business Cycle) - ansWhen expansion ends and recession begins
